EAST AFRICA: Cross-border Payments Among Central Banks Difficult

The EAC Secretary General Hon. Veronica Nduva has urged East African Community (EAC) Partner States Central Banks to embrace technology to facilitate cross-border financial transactions.

Cross-border financial transactions have increasingly become a very difficult experience in bloc member states.

“Moving money from one Partner State to another is still slow and expensive. Interoperability of digital payment systems at regional level is missing. Uptake of the East African Payment System (EAPS) has been very low. As a result, most banks in the region still use foreign correspondent banks to effect regional cross border payments,” said Hon. Nduva.

Nduva noted that some of the challenges behind the low uptake of the East African Payments System (EAPS) include limited capacity, lack of inter-operability, communication gaps between central bank’s.

She also added that stakeholders, fear of online scams, protectionism by central banks and overlapping membership by Partner States to payment systems set up by various Regional Economic Communities.

“In this regard, an efficient and reliable cross-border payment service is essential for the smooth function of any regional economic integration, such as EAC. It is partly for this reason that the East African Monetary Union (EAMU) Protocol requires EAC Partner States to harmonise and integrate their payment and settlement systems during the transition to a single currency to promote trade and investment in the region,” said Hon. Nduva.

“Over the last decade, with support from our Development Partner, many initiatives have been implemented both at national and regional levels, towards modernisation and integration of payment systems in the region.”

“Some of these initiatives were implemented by the public sector, mainly through central banks, but some were implemented by the private sector, particularly commercial banks, mobile money operators and other stakeholders,” she added.

Hon. Nduva said that there was need to for Partner States to build on successes at the domestic level to attain inter-operability of digital payment systems at the regional level.

SOURCE: TAARIFA